More than 40 Democratic lawmakers have pressed US regulators to intervene as concerns grow about the potential misuse of sensitive government information in prediction markets.
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- More than 40 Democratic lawmakers urged US regulators to issue guidance barring federal employees from using non-public information in predicting market trades.
- Lawmakers cited several suspicious deals linked to geopolitical and geopolitical events, raising concerns about insider activity and national security risks.
In a letter Writing to the Commodity Futures Trading Commission and the Office of Government Ethics, the group cited “multiple incidents” that, in their view, fueled speculation that federal employees may have used information not available to the public to conduct trades.
The lawmakers urged the two agencies to act quickly, writing that they should “circulate executive branch-level guidance” to make clear that government officials are prohibited from engaging in insider trading on such platforms.
Examples cited in the letter include bets related to the arrest of Nicolás Maduro and bets on the length of Carolyn Leavitt’s press conference.
Lawmakers also pointed to more sensitive instances of business activity linked to events such as tensions over Iran and speculation over the fate of Kristi Noem, warning that such behavior could raise national security concerns.
“Recently, it has been reported that a number of users have engaged in suspicious trades related to the invasion of Iran and the death of Ayatollah Khamenei,” the message read, citing concerns that market activity can, at times, signal or even trigger real-world events.
Regulators have been asked to provide a formal briefing by April 13, along with details on whether there are any ongoing investigations into federal employees and what systems are in place to detect such behavior.
Furthermore, lawmakers pointed out that the CFTC already treats event contracts as derivatives, bringing them under existing financial rules. As a result, it places it within the scope of the STOCK Act, a 2012 law signed by Barack Obama that bars government officials from using material nonpublic information for personal gain.
“The CFTC has determined that event contracts are derivatives that are dependent on the occurrence or nonoccurrence of an event,” the lawmakers wrote, adding that insider trading prohibitions should apply equally to prediction markets.
These concerns come at a time when platforms like Polymarket and Kalshi have emerged He saw a rise in popularity.
However, pressure on regulators is growing alongside a broader crackdown on prediction markets, as regulators question not only trading behavior but also the legality of contracts linked to real-world harm.
Ditto Reported by crypto.newsA Senate bill titled the “Death Wagering Act” was introduced earlier this month, seeking to ban event contracts linked to war, assassinations, and the death of individuals, potentially further tightening the scope of permitted offers via these platforms.
